Fear of Loss.

This house in Larkspur, on the lagoon, has been going through the normal sales cycle in Marin right now.

It’s been on a little over 100 days, and had a couple of price reductions. It went into contract recently with two offers.

This has been happening quite a bit lately. It also happened on a fourplex on Mission in San Rafael this week.

What happens is that buyers wait and watch, wondering if the price will fall, but they still really want the property. Suddenly, someone else decides they want it. They have to have it also - either they really do want it, or the fact that now someone else does also makes it more desirable.

Boom. Multiple offers, even after 100 days on market.

Remember, if you’re watching a property, you may not be alone…….

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The differences can be startling, and the effects expensive. This is one that hits particularly close to home for me. My sister bought a house in a Chicago suburb last year, and told me two weeks ago that water was leaking in through the basement walls. She brought in someone to try and unclog the sewer, which they thought was the problem. This is an excerpt from an email she sent me the other day:

we had the front yard dug up (Including breaking open the cement sidewalk) and had 12 feet of pipe replaced.  We also had to have our sump pump re-routed because the previous homeowners had it set up to drain into the sewer line  - which is totally against code.  This entailed digging about a 12-foot trench in the back yard to accommodate the sump pump so it would drain into the backyard.  Now – we’re dealing with a ton of water in the backyard from where the sump pump drains.  We can’t win!!!!!

Ouch. She’s now into this for thousands of dollars, with more to come. Would a competent home inspection have caught this? If it’s an illegal hookup, my answer is yes.

Take the time, and the money, to get a good inspection.

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A recent change at the property makes it highly desirable from a buyer perspective now. The best and biggest unit, a three bedroom, two bath, 1400 square foot apartment with a big deck overlooking Magnolia Avenue, has just vacated. The owner had it leased through July, but the tenant suddenly left, and the owner decided it was a good idea.

Why? Larkspur continues to be one of the strongest real estate markets in Marin County. This is a community where buying a house is incredibly difficult, and almost never available for less than $800,000. In fact, right now, the cheapest house still available is $999,000, and it’s a contractor’s special with a capital S. Now, buyers have the chance to own property near town, live in it, and have income to pay for the mortgage.

How much on the mortgage? The two units downstairs generate $2700 a month in rent right now, and probably have some upside. At the great interest rates available right now, that easily covers $400,000 a month in mortgage payments, and leaves $250 or so a month to help with property taxes.

That’s money you can basically subtract from the sale price. So now we’re down to $775,000, for 1400 square feet, 3/2, recently remodeled, with a front and back porch. Still sound expensive?

Take a look at condominiums in the area, such as the ones along South Eliseo in Greenbrae. For about the same price, you get about the same square footage…factor in homeowners dues on a condo (often $300 + a month in this area), and for the same money, you actually own a piece of land, and don’t have to worry about what the homeowner’s association decides to do about the leaking roof.

Which would you rather do? Own a condo for $650-$700,000, or own a larger piece of property, and enjoy the benefits of greater leverage over time?

What do you think? If you’d like a complete presentation on the benefits of owning investment property in Marin County, feel free to contact me at bravasio@fhallen.com.

Next, Part II.

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Based on percent in contract statistics, an excellent barometer of market health, the best market all year in Marin County has been Larkspur. Larkspur real estate has been strong all year. Right now, 56% of the homes on the market are in contract. Two weeks ago it was 65%. Most of this year, it’s been well over 30%. Marin County as a whole has been in the low 20% range most of the year, although it has been rising a bit the last two months.

This also checks with our observations. I described in a post a few weeks ago a multiple offer situation I was in for a client in which the asking price was $1.65 Million. That house, in Larkspur marina, closed yesterday at $1.95 Million, with three offers. There was also a home that closed a few weeks ago that came on at $2.9 Million, and after receiving nine offers, closed at $3.55 Million.

Why is Larkspur so strong? Maybe it’s the half dozen terrific restaurants lining Magnolia Avenue, several of which have received national recognition. Maybe it’s the terrific school system, or the great private schools like St. Patrick’s and Marin Primary. Or maybe it’s the Silver Peso!

We tell everyone that Corte Madera (not HOT, but definitely above average for the last several months) and Larkspur are the first great weather, and the last great commute in Marin. Not that Mill Valley has awful weather, but it does get a lot more fog than Corte Madera and Larkspur do. Some people like that. And last time we checked, the Town Center in Corte Madera is only ten minutes from the Golden Gate Bridge, even at the height of rush hour!

We’ve got lots more information about both towns on our website,including neighborhoods, schools, and the types of housing available. Or contact Pat or I for more information.

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